Consider the following preference statements: (7, 9)is preferred to (5, 8); (18, 0)is preferred to (7, 9); and (5, 8)is preferred to (6, 5). If the individual's preferences are consistent, then the preferences ordering over these four consumption bundles is:
A)(7, 9), (5, 8), (18, 0), (6, 5).
B)(18, 0), (5, 8), (7, 9), (6, 5).
C)(18, 0), (7, 9), (5, 8), (6, 5).
D)(5, 8), (6, 5), (18, 0), (7, 9).

Question

Quizplus · Accepted Answer

Using the given preference statements, we can construct the following preference ordering:
(7, 9) > (5, 8) > (6, 5) > (18, 0)
However, according to the transitive property of preferences, if A > B and B > C, then A > C. Using this property, we can rearrange the ordering to:
(7, 9) > (5, 8) > (6, 5) > (18, 0) > (7, 9)
Since (7, 9) is preferred to (18, 0), the optimal choice for the individual is (7, 9).

Consider the Following Preference Statements: (7, 9)is Preferred to (5